Global IPOs at 7-year low - EY report

Wednesday, March 23, 2016 - 01:40

The number of companies testing the waters of stock market flotation hit a seven-year low in the first three months of this year, according to EY - as a raft of economic and political concerns weighed on the market. David Pollard reports.

▲ Hide Transcript

▶ View Transcript

It's hard to know where to look.
A global slowdown on one hand, low yields on the other - the search for investor returns has been hard.
And for the first quarter of this year, new flotations provided few prospects either.
(SOUNDBITE) (English) DR. MARTIN STEINBACH, EY EMEIA IPO LEADER, SAYING:
"Global IPO activity slowed significantly, 70 percent down by volume, 39 percent down by deal numbers, so we have the weakest quarter since the start of 2009."
It's not so hard to spot why.
Amid equity market turbulence, a slump in commodities, and general uncertainty, investors are choosing to hold off.
The U.S. - usually a crucible of new offers - saw just 10 IPOs in the first quarter.
Deals down 71 percent.
And could still look vulnerable.
(SOUNDBITE) (English) DR. MARTIN STEINBACH, EY EMEIA IPO LEADER, SAYING:
"Depends also on the outcome of the outcome of the U.S. election, for example, the Fed hikes in interest rates and also the economic outlook in certain industries."
What might turn a heads, according to the EY report: where's doing well, or relatively at least.
Japan is on course for a record year in IPO volumes.
China's market gathers momentum.
And elsewhere, huge amounts of central bank liquidity should boost flotations ...
(SOUNDBITE) (English) DR. MARTIN STEINBACH, EY EMEIA IPO LEADER, SAYING:
"We are moving into negative interest environment, and investors are looking for return. I would not say the only escape is investing in equities ... so that drove valuations in the past three years, and again is backed by liquidity."
Returns ahead then, potentially, even if right now investors would rather wait and see.

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV. Learn more about Thomson Reuters products: